Kazi Zahidul Hasan :Banking experts on Friday urged the government to handover public banks to private sector management immediately since their financial condition is deteriorating rapidly as a result of reckless misconduct and inefficiency of senior management officials.They also suggested the government to form a ‘banking commission’ to make the banking bosses accountable for their misconduct and abuse of power while granting loans to various business groups and trade entities.”Public banks are now in bad shape thanks to an overload of bad, defaulted and non-performing loans in their overall credit portfolios,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation yesterday.He said bad governance, inefficiency and reckless misconduct of the senior management officials are responsible for the current state of public banks.”The increasing bad loan, big loan scams and corruption charge against the bosses of public banks is a wake up call for the public banks and the government. The government must decide immediately whether it would provide additional fund to the sinking public banks or privatize them,” said Dr Salehuddin Ahmed.Public banks struggling have failed to raise their capital for a long time despite the government efforts to recapitalize them time and again. They are now rapidly losing ground to the younger breed of private banks due to capital shortfall affecting their very existence.In this situation, he said, only the change in the governance structure for public banks may not be effective for their last effort to damage repair. The best option for the government would be to hand over them to private sector management. Hailing the BB to remove Agrani Bank’s managing director from his post, Dr Salehuddin Ahmed said the initiative of the central bank may help bring discipline in banking sector and make accountable of banking bosses from errant practices.State-owned banks have now accumulated over 50 per cent of the total defaulted loans of the banking sector, posing a potential threat to their financial health.According to an official figure, the defaulted loan amount of the banking sector now stood at Tk 60,000 crore and of the amount Tk 32,000 crore owed to eight public banks.Terming the growing defaulted loans as an ‘ominous sign’ for the financial health of public banks, former BB deputy governor Dr Khandoker Ibrahim Khaled told The New Nation yesterday that the situation only arise from the corruption of bank officials, aggressive lending, misappropriation of funds in guise of loan and politically appointed directors in the boards of these banks. “This has led them to a critical situation and therefore reduced their lending ability and affected profitability to a large extend,” he added.Expressing dismay over the performance of state-owned banks, Dr Ibrahim Khaled said that they (public banks) have become the worst banks in the country. Unscrupulous businessmen use these banks to siphon off their funds ultimately making them ‘pauper’.”Since the government is unable to control these banks and fail to restore discipline there, it should just keep Sonali Bank and hand over the rest to the private sector,” he suggested. “The government now in a fix over running the public banks because of their rising capital shortfall and default loans and massive misappropriation of funds from big loan scams,” former finance adviser of the caretaker government Dr AB Mirza Azizul Islam told The New Nation on Friday. He observed financial health of these banks has deteriorated over the past seven years when they faced massive financial scandals. Dishonest businessmen took away over Tk 10,000 crore from Sonali, Janata, Agrani, Rupali and BASIC banks throughout this period.”Political appointment to the bank boards is another reason for the loan scandal,” he said.Dr Mirza Aziz said, the government by this time provided with a capital of nearly Tk 5,000 crore through budgetary allocation but it brings nothing good to them. The problem of the banks is in governance structure. Besides, corruption of their top management officials further deepened the crisis. Addressing the problem seems to be a difficult task for the government. So, he advised the government to hand over the banks to the private sector to come out from the problem.
